Fed's Pianalto floats reducing asset purchases this year

February 15, 2013|Reuters

NEW YORK, Feb 15 (Reuters) - Reducing the Federal Reserve'slevel of asset purchases before year end would be an attractiveoption if the economy continues to improve, a top U.S. centralbank policymaker said on Friday.

Cleveland Fed President Sandra Pianalto said she does expectthe U.S. economic outlook to improve, and outlined a number ofrisks posed by the central bank's program of buying $85 billionin assets per month, including credit and interest-rate risks,as well as inflation.

"To minimize some of these risks, we could aim for a smallersized balance sheet than would otherwise occur if we were tomaintain the current pace of asset purchases through the end ofthis year, as some financial market participants are expecting,"Pianalto told a business audience at Florida Gulf CoastUniversity, according to prepared remarks.

"This course of action would be all the more attractive ifthe economic outlook continues to improve, as I expect it will."